Promises, Promises

ByJonathan RoweJuly 12, 1989

THERE'S a pattern to the crises that have jarred the country of late. From the Alaska oil spill to the savings and loan fiasco, lobbyists promised Congress such disasters would never happen. Conservatives are always saying government should be run more like a business. No self-respecting businessman would accept at face value the kinds of promises Congress routinely accepts from business.

In the early '70s, for example, when the oil industry was seeking approval of the Trans-Alaska pipeline, the industry told Congress not to worry about oil spills. ``The contingency plan which will be drawn up will detail methods for dealing promptly and effectively with any oil spill which may occur,'' said a representative of British Petroleum, the lead company in the pipeline project, ``so that its effect upon the environment will be minimal.''

Similarly, the savings and loan industry told Congress two years ago that its problems were entirely manageable. Solving them would cost the relatively modest sum of $2 billion, the industry said. ``Now,'' the Wall Street Journal reports, ``taxpayers - a.k.a. voters - are about to get stuck with an enormous bill.''

The realm in which promissory inflation runs truly rampant is taxes. Tax lobbyists learned long ago that you can't sell a loophole for the well-to-do on the basis of need. So they tout their proposals as boons to the country at large.

``We translate legislative proposals into jobs, payrolls, or economic growth for the congressman's district or the senator's state,'' Charles Walker, Washington's premier corporate-tax lobbyist, has said.

In 1981, for example, Congress passed an enormous corporate tax break that reduced federal revenues by tens of billions of dollars a year. Corporate lobbyists and the Reagan administration both said the tax cuts would prompt a flood of new investment, bringing great benefit to the working man and woman.

Four years later, Robert McIntyre, director of Citizens for Tax Justice, studied the annual reports of 275 major corporations. Mr. McIntyre found that corporate investment actually slowed down after the tax breaks were enacted.

Indeed, the 44 big companies that paid no federal income taxes - or got refunds - invested less on new plant and equipment than did the 43 companies that bore the heaviest tax burden. ITT received $178 million in tax refunds, but its investment dropped 30 percent. Meanwhile, the Whirlpool Corporation paid a tax of 42 percent, yet invested 76 percent more in productive equipment than before.

What did companies do with their tax-break millions? They increased their dividends and spent billions taking over other companies. They also increased the pay of their top executives by 54 percent.

Today, some of the same people who promoted the 1981 corporate tax cuts are promising wonderful things if Congress cuts the tax rate on capital gains. As David Stockman, Reagan's budget chief, showed in his memoirs, an economist with a computer can predict just about anything.

But there's a larger problem here. Economic-interest groups routinely make claims to Congress that don't stand up. The taxpayers end up paying the bill. In theory, such groups would lose credibility. In practice, members of Congress are inclined to believe the people who pay for their campaigns.

The answer is to do what conservatives suggest, and run the government more like a business in this respect. When interest groups make promises, get it in writing. Make the lobbyists and hired-gun experts personally responsible for the accuracy of their claims. Make them state the amount in ``liquidated damages'' they will pay - personally - to the United States Treasury if their claims don't pan out.

This would be a form of truth serum for interest groups - a test of whether lobbyists really believe their own claims. It would squeeze the hype out of the conduct of the nation's affairs. And while we're at it, when politicians make promises, why not get it in writing from them, too?